Stamp Duty on Transfer of Equity

kinger101

Berger_3 wrote: »

With regards to CGT I have done the calculations a number of times and because of the length of time owned and the length of time rented out and value of the mortgage I make it that Zero tax is payable, so if there was no mortgage no tax would be payable by her mum or her, as mentioned it's been owned for the best part of 10 years and has not risen in value a great deal comparatively so it isn't as if they are professional property flippers who have made a fast buck!

For the MIL to be entitled to any private residence relief or letting relief, as some point during the ownership, it must have been her (and not your wife's) main residence. The value of the mortgage is never imputed into the CGT calculation, and is therefore irrelevant to this tax. Your wife has no CGT calculation to do, as she's not disposing of anything.

Berger_3 wrote: »

Even more bizarrely if they sold the property and bought another they wouldn't have to pay the 3% tax as they would be replacing one with another

If you sell your main residence to purchase another main residence, the higher rates don't apply. Similarly, you can reclaim the additional SDLT if you buy a new main residence and dispose of the old main residence within 36 months. This is not the scenario you have posted.

Being blunt again, I'd strongly recommend your wife and MIL obtain professional advice when determining their CGT/SDLT liabilities, and not rely on any information you convey to them. I'm not sure you're competent to do the calculations as you do not appear to understand the rules.

AnotherJoe

Berger_3 wrote: »

I take exception to the suggestion that me or my wife are "rich" or "fat cats" ......

I think you misunderstood the poster, they were posting from the perspective of the politicians and their public position regards taxes. No criticism was meant I'm sure, dont take it personally.

And dont take this personally either, but the fact is compared to most, despite your protestations if you own two BTL properties plus a residential one, you are rich, end of. (For that definition of rich )

booksurr

Berger_3 wrote: »

I take exception to the suggestion that me or my wife are "rich" or "fat cats" She has owned it jointly for the best part of 10 years. It was bought not long before the crash, and like my own property was in negative equity until recently. She lived there until three years ago until she moved in with me. We've only recently sold my flat that also spent about 5 years in negative equity and bought a place together. We've done our time and between us had to live the best part of 20 years in our respective flats before the market recovered sufficiently for us to be able to move on. We actually had it up for sale until recently but it didn't get any interest at price that would've made 10 years of ownership worthwhile with the equity she would've received from it so have decided to keep it on.

With regards to CGT I have done the calculations a number of times and because of the length of time owned and the length of time rented out and value of the mortgage I make it that Zero tax is payable, so if there was no mortgage no tax would be payable by her mum or her, as mentioned it's been owned for the best part of 10 years and has not risen in value a great deal comparatively so it isn't as if they are professional property flippers who have made a fast buck!

Even more bizarrely if they sold the property and bought another they wouldn't have to pay the 3% tax as they would be replacing one with another, http://www.theguardian.com/money/2016/may/12/will-higher-rate-stamp-duty-apply-if-my-ex-wants-to-buy-me-out so I'm not quite sure how your comments stack up in light of that and how clobbering people caught up in this scenario with the 3% tax is really in the spirit of the new legislation.

your MIL is disposing of her share of the property. Was it ever your MIL's main home? If not then she has no entitlement to CGT relief other than her personal allowance and so faces a CGT liability. The mortgage is irrelevant when working out the size of the gain to be taxed

have you factored into your CGT calculations the fact that a married couple has only one exempt main residence so the date of your marriage determines when she ceased being able to claim it as her residence if that was earlier than 3 years ago

linking to a newspaper article just confirms that you still do not understand the implications of the new rate. Your wife is not replacing her main home, she is buying an additional share of a second property that is not her main home

as to "fat cats" surely you understand that to the majority of the UK public anyone in a position to own 2 properties is so regarded or are you really that out of touch with public opinion and therefore why politicians can relatively safely target certain sections of society when "adjusting" the tax regime